Selling Gains Steam on Wall Street as Eurozone Meeting is Scrapped

U.S. stocks retreated Tuesday afternoon as Wall Street's economic and eurozone concerns were renewed by a weaker-than-expected retail sales report and the cancellation of a key meeting on the Greek bailout.

Today's Markets

As of 2:49 p.m. ET, the Dow Jones Industrial Average fell 75.23 points, or 0.58%, to 12799.26, the Standard & Poor's 500 slipped 9.57 points, or 0.71%, to 1342.21 and the Nasdaq Composite declined 19.20 points, or 0.66%, to 2911.89.

After flirting with positive territory earlier, the markets were sinking to their lowest levels of the day during the final 90 minutes of trading. The latest selling comes after the Eurogroup confirmed it has called off a crucial meeting in Brussels on a $162 billion bailout of Greece, underscoring the rescue package is anything but a done deal.

The slump leaves Wall Street on track to give back its solid gains from Monday, which were fueled by Greece's passage of painful austerity measures in an effort to avoid a disorderly default. Led by tech heavyweight Apple (AAPL), that rally left the Nasdaq Composite at its highest level since December 2000.

Selling began after the Commerce Department said U.S. retail sales rose 0.4% in January, missing forecasts from analysts for a jump of 0.7%. Surprisingly, sales were stronger when the auto sector is included, increasing 0.7%. December retail sales were cut to unchanged from up 0.1%.

In the wake of that report, retailers such as Wal-Mart (WMT) and Abercrombie & Fitch (ANF) were mixed.

On the European front, the head of the Eurogroup, which is a group of eurozone finance ministers, said the Greek bailout meeting was canceled due to the need to do further work in a number of areas, including how to close a 325 million euro fiscal gap in 2012 and certain necessary political pledges from Greek leaders. Instead of the Brussels meeting, the Eurogroup plans to convene on Wednesday via a teleconference.

The news underscores the number of hurdles still facing Greece as it attempts to avoid a disorderly default on March 20 when it faces $19 billion of bond redemptions.

Meanwhile, Moody's downgraded the credit ratings of Italy, Spain, Portugal, Slovenia, Slovakia and Malta late Monday, citing the fragility of the European banking system. The ratings company also surprised some by warning it could downgrade the debt rating of not only France, but also the U.K., which is not part of the eurozone.

On the other hand, a new report revealed Germans turned optimistic about the economy in February for the first time since May 2011. The closely-watched index topped forecasts by soaring to 5.4 points this month, up from -21.6 in January.

With that backdrop in mind, selling in the euro accelerated, with the currency recently off 0.74% to $1.3086. Major European lenders like Barclays (BCS) and Deutsche Bank (DB) fell more than 2% a piece.

Big banks led the way down on Tuesday as the KBW banking ETF retreated about 3%. Bank of America (BAC) dropped 3% after being downgraded to "neutral" from "buy" by analysts at Citigroup amid concerns about earnings headwinds.

Apple (AAPL) is testing a new tablet device that will feature a smaller, 8-inch screen as the consumer electronics maker looks to capture market share, The Wall Street Journal reported. It's not clear what the new device would be called. Apple is also preparing to unveil in March the iPad 3, which will feature a higher resolution screen as its predecessor, the paper reported.